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DiMare: Mexican imports imperil Florida tomato industry

The Florida winter tomato deal — and perhaps the Florida tomato industry, period — could be at risk because of rapidly increasing volumes from Mexico, according to an industry veteran.

A Mexican industry official, meanwhile, says the tomato industry loses if any grower goes out of business, north or south of the border.

Tony DiMare, vice president of the Homestead, Fla.-based DiMare Co., one of Florida’s largest shippers, said the U.S. government is not doing a good enough job cracking down on illegally low-priced Mexican tomatoes and on shipments that are not meant for export but come to the U.S. anyway.

Reggie Brown, executive vice president of the Maitland-based Florida Tomato Exchange, said there has been “some circumvention” in past years of a suspension agreement between the U.S. and Mexico that sets a price minimum, and he fears there could be more this season.

As a result, DiMare said, Florida tomato growers are struggling to weather an ever-increasing flood of Mexican product that is keeping prices below production costs for months at a time.

With rising production costs, the break-even price for Florida growers is $9 or $10 per box, DiMare said. Growers no longer enjoy the strong markets that make up for the weak ones, he said.

“It’s at risk, there’s no question about it,” DiMare said. “We cannot continue to sustain these kinds of losses. It will eventually knock us out of the winter deal, and maybe eventually out of the entire deal.”

That would hurt everyone, not just Florida, said Eric Viramontes, chief executive officer of the Mexican Association for Protected Horticulture, Culiacan.

“I can understand (DiMare’s) worries,” Viramontes said. “We don’t want the industry to disappear in any area. We’re all on the same ship.”

That said, Viramontes asserts that all of the growers under his organization’s umbrella are complying with the suspension agreement, though AMHPAC would welcome a greater role in the enforcement of it. That authority, he said, would have to come from the U.S. government.

“It’s in our best interest that tomatoes not be dumped,” Viramontes said.

AMHPAC does not, however, support changing the agreement to limit volumes, a change which DiMare said could be necessary to buoy markets.

“I see (DiMare’s) point of view, but that would be opening a very dangerous door,” Viramontes said. “You always have to think of the butterfly effect. You may regret it later.”

The growth of the Mexican greenhouse vegetable industry has been good not only for Mexico, but for the U.S., as well, Viramontes said. An AMHPAC study found that in 2009 alone, the industry accounted for 8,000 new jobs in the U.S.

In mid-January, Mexican tomatoes were already selling at the lowest price allowed under the suspension agreement, about 21 cents per pound, DiMare said.

That was before peak volumes from south of the border even started to hit, he said. When they do, product will come into the U.S. that is below the suspension agreement floor price.

In addition, product marked “not for export” also will make it across, DiMare said.

“The U.S. Department of Agriculture is supposed to be monitoring it, but it seems like every year that kind of product finds its way into the market,” he said.

Mexican field-grown tomato volumes have fallen off in recent years, but greenhouse volumes have skyrocketed, according to the U.S. Department of Agriculture.

In the 2005-06 season, about 343 million pounds of greenhouse tomatoes were shipped from Mexico to the U.S. By 2010-11, the total had risen to 771 million pounds.

Brown compared the suspension agreement to a dike. If the water keeps rising, there’s a point at which the dike can no longer do its job. And that point has been reached in the tomato industry.

“The marketplace is grossly oversupplied with capacity,” Brown said. “One answer is to find a mechanism at the border to avoid overwhelming the marketplace.”

Even if Mexican shippers don’t dip below the floor price established by the suspension agreement, Brown says the floor price isn’t high enough for anyone — definitely in the U.S., and probably in Mexico, too — to make a profit.

Lance Jungmeyer, president of the Nogales, Ariz.-based Fresh Produce Association of the Americas, which conducts workshops educating growers and importers about the suspension agreement, said it has succeeded in bringing order to the marketing of Mexican tomatoes.

“Everyone I talk to says it’s good,” Jungmeyer said.

Any violations of the agreement are an anomaly, he said. Shippers don’t stand to gain from dumping fruit, and under the agreement they face stiff fines if they do.

“Anyone who’s in it for the long haul has no interest in subverting this,” he said.

As for changing the agreement to limit volumes, Jungmeyer doubts if such a change would stand up to North American Free Trade Agreement and World Trade Organization scrutiny.

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About the Author:

Andy Nelson, markets editor

Andy Nelson joined The Packer as a staff writer in 2001. He became the paper's Handling & Distributing editor in 2005 and markets editor in 2006. Before joining Vance, Nelson was a staff writer for The Kansas City Star.